ASSETS PURCHASE AGREEMENT dated as of January 4th, 2008 by and between RxElite Israel LTD. and FINETECH LABORATORIES LTD.
ASSETS
PURCHASE AGREEMENT
dated
as of
January
4th, 2008
by
and between
RxElite
Israel LTD.
and
FINETECH
LABORATORIES LTD.
TABLE
OF CONTENTS
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ARTICLE
I. PURCHASE AND SALE OF ASSETS
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1
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1.01
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PURCHASE
AND SALE OF ASSETS
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1
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1.02
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PURCHASE
PRICE
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1
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ARTICLE
II. REPRESENTATIONS AND WARRANTIES OF THE SELLER
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3
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2.01
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EXISTENCE
AND POWER OF THE COMPANY
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3
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2.02
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AUTHORIZATION
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3
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2.03
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NON-CONTRAVENTION
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3
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2.04
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SUBSIDIARIES
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4
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2.05
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FINANCIAL
STATEMENTS
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4
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2.06
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ABSENCE
OF CERTAIN CHANGES
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4
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2.07
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ASSETS
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4
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2.08
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REAL
PROPERTY
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4
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2.09
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INTELLECTUAL
PROPERTY
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5
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2.10
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PRODUCT
WARRANTY
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5
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2.11
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PRODUCT
LIABILITY
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5
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2.12
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MATERIAL
CONTRACTS
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6
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2.13
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LICENSES
AND PERMITS
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6
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2.14
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EMPLOYEES
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6
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2.15
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ENVIRONMENTAL
MATTERS
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7
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2.16
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TAX
MATTERS
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7
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2.17
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TRANSACTIONS
WITH AFFILIATES
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7
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2.18
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FEES
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8
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2.19
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CUSTOMERS
AND SUPPLIERS
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8
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2.20
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COMPLIANCE
WITH LAWS; NO DEFAULTS
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8
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2.21
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LEGAL
PROCEEDINGS
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8
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2.22
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CAPITALIZATION
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8
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2.23
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NO
UNDISCLOSED LIABILITIES
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8
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2.24
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COMPLIANCE
WITH THE FOREIGN CORRUPT PRACTICES ACT, EXPORT CONTROL AND ANTIBOYCOTT
LAWS
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8
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2.25
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CONDITION
AND SUFFICIENCY OF ASSETS
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9
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2.26
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BOOKS
AND RECORDS
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9
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2.27
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INVENTORIES
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9
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2.28
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ACCURACY
OF INFORMATION FURNISHED
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9
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ARTICLE
III. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
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9
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3.01
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ORGANIZATION
AND EXISTENCE
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9
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3.02
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CORPORATE
AUTHORIZATION
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9
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3.03
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GOVERNMENTAL
AUTHORIZATION
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10
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3.04
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NON-CONTRAVENTION
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10
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3.05
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FEES
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10
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3.06
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LITIGATION
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10
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3.07
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CONFIRMATION
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10
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3.08
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CSO
RULES
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10
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ARTICLE
IV. COVENANTS OF SELLER AND PURCHASER
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10
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4.01
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BEST
EFFORTS; FURTHER ASSURANCES
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10
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4.02
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COMPLIANCE
WITH LAWS
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11
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4.03
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CERTAIN
FILINGS
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11
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4.04
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PUBLIC
ANNOUNCEMENTS
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11
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4.05
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NOTICE
OF DEVELOPMENTS
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11
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ARTICLE
V. CLOSING
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11
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5.01
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CLOSING
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11
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5.02
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DELIVERIES
AND ACTIONS BY THE SELLER
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11
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5.03
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DELIVERIES
AND ACTIONS BY THE PURCHASER
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12
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ARTICLE
VI. INDEMNIFICATION
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12
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6.01
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INDEMNIFICATION
BY THE SELLER
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12
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6.02
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INDEMNIFICATION
BY THE PURCHASER
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13
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6.03
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INDEMNIFICATION
PROCEDURE FOR THIRD-PARTY CLAIMS
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13
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6.04
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LIMITATIONS
ON INDEMNIFICATION
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14
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ARTICLE
VII. MISCELLANEOUS
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14
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7.01
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SURVIVAL
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14
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7.02
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NOTICES.
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14
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7.03
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AMENDMENTS;
NO WAIVERS
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15
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7.04
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EXPENSES
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15
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7.05
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SUCCESSORS
AND ASSIGNS
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15
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7.06
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GOVERNING
LAW
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15
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7.07
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SPECIFIC
PERFORMANCE
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15
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7.08
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COUNTERPARTS;
EFFECTIVENESS
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15
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7.09
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ENTIRE
AGREEMENT
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15
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7.10
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CONSTRUCTION
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16
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7.11
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SEVERABILITY
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16
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7.12
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CERTAIN
DEFINITIONS
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17
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This
Asset Purchase Agreement (the “Agreement”)
is
made and entered into as of January 4th, 2008, by and between RxElite Israel
Ltd., a limited liability company organized under the laws of the State of
Israel (the “Purchaser”),
a
company fully owned by, RxElite Inc., a Delaware corporation, the sole
shareholder of the Purchaser (“RxElite”),
and
FineTech Laboratories, Ltd., a limited liability company organized under the
laws of the State of Israel (the “Seller”
or
“Finetech”
or
the
“Company”),
a
company fully owned by ▇▇. ▇▇▇▇ ▇▇▇▇▇▇ (“▇▇▇▇▇▇”).
WITNESSETH:
WHEREAS,
the Company is engaged in the business of developing, manufacturing, and
marketing active pharmaceutical ingredients and development services (the
“Business”);
WHEREAS,
the Seller desires to sell and transfer to the Purchaser, and the Purchaser
desires to purchase and acquire from the Seller, all of the assets of the
Company, all on the terms and conditions set forth in this Agreement;
NOW,
THEREFORE, for good and valuable consideration, the receipt and sufficiency
of
which are hereby acknowledged, the parties hereto hereby agree as follows,
intending to be legally bound:
ARTICLE
I.
PURCHASE
AND SALE OF ASSETS
AND
RELATED MATTERS
1.01 Purchase
and Sale of Assets.
Upon the
terms and subject to the conditions set forth in this Agreement, the Seller
hereby agrees to sell, convey and transfer to the Purchaser, and the Purchaser
hereby agrees to purchase and acquire from the Seller, all of the assets
of the
Seller (the “Acquired
Assets”,
which
term includes the tangible and intangible assets of the Company, Inventories,
Intellectual Property Assets, Contracts, clients base and clients relations,
and
all other assets of the Company, except the Excluded Assets).
1.02 Purchase
Price and Payment. The
purchase price for the Acquired Assets (the “Purchase
Price”)
shall
be US$6,200,000 (six million and two hundred thousand US Dollars), payable
in
cash on the Closing Date, in the following manner: (i) on the date of signing
this Agreement, the
Purchaser will deposit the Purchase Price in the hands of Advocate Y. Primes
of
the Law Firm Primes, Givon, Shiloh and Meir (the “Trustee”),
such
deposit to be effected in the form of a wire transfer to a trust account
operated by the Trustee, as notified by the Trustee prior to the date of
signing; (ii) the Trustee will release the amount of the Purchase Price
to the
Seller upon presentation of the documents set forth in Sections 5.02(a)
and
5.02(b), appearing to be duly signed; (iii) should these documents not
be
presented to the Trustee within 30 days after the date of this Agreement,
the
Trustee will return to the Purchaser the full amount deposited in his hands.
In
the
event described in sub-paragraph (iii) above, this Agreement shall be terminated
without claims or demands among the parties hereto, except that the Purchaser
and RxElite will be bound to maintain in confidence and not use or enable
others
to use any and all confidential information of the Company, and these
undertakings of the Purchaser and RxElite will survive such termination
and
remain valid and binding for a period of five (5) years.
1.03 Assignment
of Contracts. The
Company is a party to several contracts with customers/licensees, lessors,
service providers and others. Copies of all these contracts (the “Contracts”)
were
submitted to the Purchaser.
1
Subject
to the following provisions of this Section 1.03, the Company hereby assigns
the
Contracts to the Purchaser, and the Purchaser hereby accepts this assignment.
As
regarding the December 2006 agreement between the Company and Unipharm
Ltd., the
parts of this agreement that deal with options to purchase shares of the
Company
will not be assigned to the Purchaser, and the Purchaser will have no liability
for issuance of shares to Unipharm.
The
parties hereto will make all reasonable efforts to obtain the approval
of the
other parties to the Contracts to the aforesaid assignment. Until such
consent
is obtained (or until the expiration of those Contracts for which the consent
is
not obtained), the following “back to back” rules will apply: (i) the Company
will continue to operate the Contracts, (ii) the Purchaser will perform,
as a
sub-contractor to the Company, all the undertakings of the Company under
the
Contracts, and will be liable towards the Company for all matters for which
the
Company is liable towards the other parties to the Contracts, and (iii)
the
Purchaser will be entitled to all consideration received by the Company
out of
the Contracts after the Closing Date, and the Company shall transfer to
the
Purchaser all such consideration upon receipt from the other parties to
the
Contracts.
1.04 Assignment/Obtainment
of Permits, etc. Following
the Closing, the parties hereto will make all reasonable efforts to cause
the
transfer to the Purchaser’s name, or the obtainment by the Purchaser, of the
permits, licenses,
franchises and other similar authorizations presently held by the
Company.
1.05 Employees.
Following
the Closing, the Company will give a termination notice to all its employees.
At
the same time, the Purchaser will present to all such employees an offer
to
become the employees of the Purchaser, under terms similar to those applicable
to their employment by the Company. The termination of the employment relations
with the Company will become effective 30 days after the date of the notice
(the
“Notice
Period”),
and
the new employment contracts between the Purchaser and the accepting employees
will become effective on the same date.
The
Company is responsible for all payments and benefits due to the employees
and
for all payments related to their employment (including amounts to be paid
to
the tax and social security authorities) arising from the period until
the
effective date of termination and from the termination of the employment
relations with the Company.
During
the Notice Period, the following rules will apply: (i) the employees will
be
required to continue to carry out their functions in the Company as before,
(ii)
the work product will belong to the Purchaser and will be to the benefit
of the
Purchaser, (iii) the Purchaser will reimburse the Company for all costs
of the
Company related to the employment of the employees during the Notice Period.
1.06 Excluded
Assets. The following items (herein referred to as the “Excluded
Assets”)
are
not included in the Acquired Assets: (i) Accounts Receivable and Accounts
Payable, as outstanding on the Closing Date, (ii) all bank accounts and
cash on
hand, (iii) debts due to the Company, as outstanding on the Closing Date,
(iv)
debts of the Company to third parties (including government authorities),
as
outstanding on the Closing Date, (v) liabilities
arising from the Contracts
that are
attributable to the pre-Closing period, (vi) loss carry-forward amounts
for tax
purposes. All of the foregoing Excluded Assets are to the benefit, cost
and
responsibility of the Company.
2
ARTICLE
II.
REPRESENTATIONS
AND WARRANTIES OF THE SELLER
The
Seller hereby represents and warrants to the Purchaser as of the date hereof
and
as of the Closing Date (unless another date is expressly set forth below)
that:
2.01 Existence
and Power of the Company.
The
Company is a corporation duly organized, validly existing and in good standing
under the laws of Israel, and the Company has all corporate powers and
all
governmental licenses, permits, authorizations, consents and approvals
required
to carry on the Business as now conducted. However, the use and marketing
of the
Company’s products in each jurisdiction requires regulatory permits, and the
customary practice of the Company is to require its customers to obtain
such
permits. As a result, the Company makes no warranty regarding the existence
or
availability of such permits. The Company has heretofore delivered to the
Purchaser true and complete copies of the Company’s articles of association as
currently in effect.
2.02 Authorization.
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(a) Except
as expressly provided in this Agreement, the execution, delivery
and
performance by the Seller of this Agreement and all other documents
and
agreements to be executed by the Seller in connection herewith
(the
“Related
Documents”)
and the consummation by the Seller of the transaction contemplated
hereby
require no action by or in respect of, or filing with, any
governmental
body, agency, official or authority in Israel.
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(b) The
Seller shall notify the Chief Scientist Office (“CSO”)
and the Investment Centre of the State of Israel Industry,
Trade and
Employment Ministry of the transaction hereunder, and shall
make all
reasonable efforts to obtain the approval of these two bodies,
if
necessary. Each of the Purchaser and RxElite acknowledges its
awareness
that the Purchaser and RxElite will be required to execute
a document
towards the CSO, materially confirming the matters described
in Section
3.08 below, and each of the Purchaser and RxElite hereby agrees
to execute
such document. The
obtainment of the CSO approval is a condition precedent to
the validity
and effectiveness of this Agreement.
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(c) The
US corporation PAR Pharmaceutical Companies, Inc. (“PAR”)
is a major client of the Company for the Cabergoline API. On
October 31,
2007, Finetech has given notice to PAR that it intends to cease
the supply
of Cabergoline to PAR. Consequently, PAR has a limited period
option to
purchase material assets of Finetech. The written waiver by
PAR of this
option, or non-exercise of the option until the expiration
of the option
period, is a condition precedent to the validity and effectiveness
of this
Agreement.
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(d) This
Agreement and the Related Documents have been duly executed
and delivered
by the Seller and constitute the valid and legally binding
obligation of
the Seller, enforceable against the Seller in accordance with
their
respective terms, except as such enforceability may be limited
by laws
governing bankruptcy, insolvency, reorganization, moratorium,
fraudulent
conveyance or other similar laws, without limitation, relating
to or
affecting creditors’ rights generally.
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2.03 Non-Contravention.
Subject
to the conditions precedent as set forth in Section 1.03 and in Section
2.02
above, the execution, delivery and performance by the Seller of this Agreement
and the Related Documents, and the consummation of the transactions contemplated
hereby and thereby do not and will not:
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(a) contravene,
violate or conflict with, or constitute a violation of, any
provision of
any law, regulation, judgment, injunction, order or decree
binding upon or
applicable to the Seller;
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3
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(b) conflict
with, result in a breach or violation of, or constitute a default
under,
any agreement, contract or other instrument binding upon the
Seller;
or
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(c) result
in the creation or imposition of any Encumbrance on any of
the Acquired Assets.
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2.04 Subsidiaries.
The
Company does not own directly or indirectly, any capital stock, equity
interest
or other ownership interest in any corporation, partnership, association,
joint
venture, limited liability company or other entity.
2.05 Financial
Statements.
The
audited 2006 Year End Financial Statements and the un-audited November
30, 2007
year-to-date income statements for the Company have been previously delivered
to
the Purchaser. The Year End Financial Statements of the Company were prepared
in
accordance with Generally Accepted Accounting Principles in Israel
(“GAAP”)
applied on a consistent basis. The Year End Financial Statements fairly
present
the financial position of the Company as of the date thereof and its results
of
operations for the period then ended. The un-audited “30 November
2007
Balance Sheet”
and
income statement as of and for the first 11 months of calendar year 2007
(the
“January to November 2007 Income
Statement”),
and
together with the Cash Flow Statement for the same period, the “Interim
Balance Sheet”)
attached hereto as Schedule 2.05 fairly present in all material respects
the
financial position of the Company as of the date thereof and the results
of
operations for the periods then ended and were prepared in accordance with
GAAP
applied on a consistent basis (except for any absence of footnotes required
by
GAAP and subject to customary year-end adjustments).
2.06 Absence
of Certain Changes. Since
December 31, 2006, except
as
described in sub-section 2.02(c), the
Company has conducted its business and operations in the ordinary course
consistent with past practice and to the knowledge of the Seller, except
as
disclosed on the Interim Balance Sheet, there has not been any Material
Adverse
Effect on the Company or the Acquired Assets or any event, occurrence,
development or state of circumstances or facts which as of the date hereof
could
reasonably be expected to have a Material Adverse Effect on the Company
or the
Acquired Assets;
2.07 Ownership.
The
Seller is the sole and exclusive owner of, and has good and marketable
title to
the Acquired Assets, free and clear of all Encumbrances, and is exclusively
entitled to possess and dispose of same. At the Closing, the Seller will
transfer to the Purchaser good and marketable title to all of the Acquired
Assets, free and clear of any and all Encumbrances. At the Closing, there
shall
be no outstanding agreements or options to sell to any person or entity
other
than the Purchaser the right to purchase or otherwise acquire any of the
Acquired Assets.
2.08 Real
Property.
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(a) The
Company does not own any Real Property.
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(b) The
Company is a party to a rental contract with Nesharim concerning
the
Leased Premises (the “Lease”),
and has valid leasehold interest(s) in the Leased Premises.
The Lease is
(i) the legal, valid and binding obligation of the Company,
(ii) in full
force and effect in accordance with its terms and (iii) enforceable
against the landlord that is party thereto in accordance with
its terms.
There exists no default or event of default (or any event that
with notice
or lapse of time or both would become a default) on the part
of the
Company or, to Seller’s knowledge, the lessor under the Leases. The Seller
has provided to the Purchaser a complete and correct copy of
the Lease,
including all amendments thereto.
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4
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(c) To
the knowledge of the Seller, there are no developments affecting
any of
the Leased Premises pending or threatened which could materially
detract
from the value of the Leased Premises or materially interfere
with any
present or intended use thereof.
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(d) The
Lease is one of the Contracts, and will be assigned to the
Purchaser in
the manner described in Section 1.03 above.
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2.09 Intellectual
Property.
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(a) The
Company owns all right, title and interest in and to or is
duly licensed
to use or may freely use, all of the Intellectual Property
presently used
in the operation of the Business as it is conducted or as expected
to be
conducted on the Closing Date. To the knowledge of the Seller,
there is no
other item of Intellectual Property that is necessary for the
conduct of
the Business as presently operated or as expected to be operated
as of the
Closing Date. To the knowledge of the Seller, the operation
of the
Company’s Business does not infringe, misappropriate or otherwise violate
or misuse any Intellectual Property of any third party (“Third
Party Intellectual Property Assets”).
To the knowledge of the Seller, the Business as presently conducted
does
not, and the Intellectual Property as historically used by
the Company do
not, interfere with, infringe upon, misappropriate or otherwise
come into
conflict with, any Third Party Intellectual Property Assets.
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(b) Attached
as Schedule 2.09 is a status report, prepared by the Company’s patent
attorneys, showing the status (subject to future developments)
of all
patent applications filed by or on behalf of the Company and
all patents
granted to the Company. All
licenses to use intellectual property rights that were granted
to or by
the Company (excluding “off the shelf” licenses) are as provided in the
Company’s contracts listed on Schedule 2.12. Nothing
contained in this Agreement means, or will be interpreted to
mean, that
the Seller warrants or promises any of the following: (i) that
patent
applications will mature into patents, (ii) the scope of protection
granted by any issued patent, (iii) the validity of any patent,
(iv)
immunity of any patent from revocation or circumvention, (v)
the continued
value of any patent.
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2.10 Product
Warranty.
To the
knowledge of the Seller and subject to receipt of all necessary territorial
permits by the Company’s buyers, each product sold, leased or delivered, and
each service rendered, by the Company has been in conformity with all applicable
laws, contracts and all express and implied warranties, and the Company
does not
have any currently known liability (whether conditional or unconditional,
latent
or patent) thereunder, and there is no currently known basis for, any present
or
future action against it giving rise to any such liability. Except for
normal
warranties customarily provided to buyers and users, no product sold, leased
or
delivered, and no service rendered, by the Company is subject to any guaranty,
warranty or other indemnity or similar liability.
2.11 Product
Liability.
To its
knowledge, the Company does not have any liability, and there is no basis
for,
any present or future action against it giving rise to any such liability,
arising out of any injury to individuals or property as a result of the
ownership, possession or use of any product sold, leased or delivered by
the
Company.
5
2.12 Material
Contracts.
The
Seller have caused to be made available to the Purchaser for review complete
and
correct copies of all the contracts listed on Schedule 2.12 (the “Contracts”),
which
contains a complete and accurate list of all material contracts to which
the
Company is a party or which relate to the Business. All of the Contracts
are
valid, binding and in full force and effect against the Company and, to
the
Seller’s knowledge, are valid, binding and in full force and effect against the
other parties thereto. The Company is not in default in any material respect,
and no notice of alleged default has been received by the Company under
any of
the Contracts, no other party thereto is, to the Seller’s knowledge, in default
thereunder in any material respect, and, to the Seller’s knowledge, there exists
no condition or event which, with or without notice or lapse of time or
both,
would constitute a material default under any of the Contracts by the Company
or
any other party thereto. The
Contracts will be assigned to the Purchaser in the manner described in
Section
1.03 above.
2.13 Licenses
and Permits.
Schedule
2.13 lists and correctly describes each governmental license, permit,
authorization, consent or approval affecting, or relating in any way to,
the
Company or the Business, together with the name of the Governmental Authority
issuing such license or permit (the “Permits”).
Except end of year renewal requirements, all such Permits are valid and
in full
force and effect. Such Permits are sufficient for the operation of the
Business
as presently conducted, subject to receipt of all necessary territorial
permits
by the Company’s buyers in each jurisdiction. The
Permits will be assigned to the Purchaser in the manner described in Section
1.03 above.
2.14 Employees.
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(a) Schedule
2.14(a) contains a complete list of all employees, contractors
and other
persons employed by or contracted directly by the Company (the
“Affected
Employees”).
The Seller has previously provided the Purchaser the following
information
for each Affected Employee: (i) the rate of pay for such Affected
Employee
(presently and for the past six months) and any and all commission,
bonus
or other compensation arrangements between the Company and
such Affected
Employee, (ii) the location of such Affected Employee, (iii)
the entity
that employs such Affected Employee and (iv) the current position
of each
Affected Employee.
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(b) Except
as provided by applicable law (including, inter-alia, extension
decrees
under the law in Israel), and except as provided in individual
agreements
of the Affected Employees, the Company is not a party to (i)
any
collective bargaining agreement covering any Affected Employee,
(ii) any
agreement respecting the employment of any Affected Employee,
or (iii) any
agreement for the provision of consulting or other professional
services
provided by any Affected Employee which is not cancelable without
penalty
(except severance pay) on less than 30 days notice. Within
the last year
the Company has not experienced any labor disputes, unfair
labor practice
changes, union organization attempts or any work stoppage due
to labor
disagreements. The Company is in compliance with all applicable
laws
respecting employment and employment practices, terms and conditions
of
employment and wages and hours with respect to any Affected
Employee, and
is not engaged in any unfair labor practice with respect to
any Affected
Employee. The Seller is not aware of any current attempts to
organize or
establish any labor union or employee association relating
to the Affected
Employees nor is there any certification of any such union
with regard to
a bargaining unit pending.
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(c) There
are no benefits due to Affected Employees except as provided
by applicable
law (including, inter-alia, extension decrees under the law
in Israel), by
the individual agreement of each Affected Employee and by custom
in
Israel.
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(d) A
former employee of the Company has filed a claim against the
Company for
an amount equal to app. US$26,000. The Company is opposing
this claim in
court, and believes that it has a good chance of winning the
case or
paying a reduced amount.
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(e) The
provisions of Section 1.05 above shall apply to the employees
of the
Company.
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2.15 Environmental
Matters.
Without
in any manner limiting any other representation or warranty set forth in
this
Agreement:
with
respect to each Business Facility, to its knowledge, the Company is in
compliance with, and has no liability under any applicable environmental
law.
2.16 Tax
Matters.
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(a) The
Company
has timely filed (taking into account any applicable extensions)
all
applicable Tax Returns and reports for all years and periods
for which
such returns and reports were due to be filed by it prior to
the Closing
Date. To the knowledge of the Seller, each of such Tax Returns
as
filed was correct and complete.
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(b) The
Company
is
not currently the subject of an audit, other examination, matter
in
controversy, proposed adjustment, refund litigation or other
proceeding
with respect to Taxes by the Tax authorities of Israel, nor
has the
Company
received any notices from any Tax authority relating to any
such issue or
potential issue.
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(c) There
are no liens for Taxes upon any
assets or properties of the Company,
except for statutory liens for current Taxes not yet due. The
Company
has not, as of the date hereof, entered into an agreement or
waiver
extending any statute of limitations relating to the payment
or collection
of Taxes.
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(d) The
Company
has timely paid all Taxes and Tax liabilities in respect of
periods prior
to the date hereof and, to its knowledge, has accrued on its
financial
statements an amount necessary to pay in full all unpaid Taxes.
To its
knowledge, the Company
has complied with all applicable Tax Laws.
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(e) To
its knowledge, all
Taxes that the Company is or was required to withhold have
been duly
withheld and, to the extent required, have been paid to the
proper
Governmental Authority.
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2.17 Transactions
with Affiliates.
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(a) Except
as regards the relations between ▇▇▇▇▇▇ and the Company and
except for the
recent repurchase by the Company of its shares, the Company
has not
purchased, acquired or leased any property or services from,
or sold,
transferred or leased any property or services to, or loaned
or advanced
any money to, or borrowed any money from any officer, director
or
shareholder of the Company or any of their respective Affiliates,
except
for loans, advances or borrowings repaid prior to the Closing
Date.
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(b) None
of the present shareholders of the Company has
any interest in any property (whether real, personal, or mixed
and whether
tangible or intangible), used in or pertaining to the Business.
None of
such shareholders owns (of record or as a beneficial owner)
an equity
interest in, a Person that has (i) business dealings or a material
financial interest in any transaction with the Company (other
than
business dealings or transactions conducted in the Ordinary
Course of
Business with the Company at substantially prevailing market
prices and on
substantially prevailing market terms), or (ii) engaged in
competition
with the Company with respect to any line of products or services
of the
Company (a “Competing
Business”)
in any market presently served by the Company. Except as regards
the
management services provided by ▇▇▇▇▇▇ to the Company and as
described in
the Assignment and Non-Competition Agreement attached hereto,
none of the
present shareholders of the Company is a party to any Contract
with, or
has any claim or right against, the Company, other than his
rights as
shareholder.
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7
2.18 Fees.
The
Company has not incurred any obligation or liability, contingent or otherwise,
for brokers’ or finders’ fees in respect of the matters provided for in this
Agreement.
2.19 Customers
and Suppliers.
Except
for the decision of the Company to cease supply of cabergoline to PAR,
the
Company has no knowledge of any intention or indication of intention by
a
significant customer or a significant supplier to terminate its business
relationship with the Company or to limit its business relationship with
the
Company in any material respect.
2.20 Compliance
with Laws; No Defaults.
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(a) To
its knowledge, the Company is not (i) in violation of any statute,
law,
rule or regulation or any judgment, order, writ, injunction
or decree of
any court or Governmental Authority to which the Company is
subject or
(ii) subject to any claim asserted by any Governmental Authority
that the
Company is in violation of any Legal Requirement.
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(b) To
its knowledge, as of the date hereof, the Company is not in
default under,
and no condition exists that with notice or lapse of time or
both would
constitute a default under, any contract or other instrument
binding upon
the Company or affecting or relating to its business or any
license,
authorization, permit, consent or approval held by the Company
or
affecting or relating to its business, except as otherwise
disclosed in
this Agreement or in Schedules attached
hereto.
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2.21 Legal
Proceedings.
There is
no order in which relief is sought involving, affecting, or relating to
the
Company or the Business or the ownership, operation or use by the Company
of any
of its assets or that would prevent, delay or make illegal the transaction
contemplated by this Agreement and there is no litigation, action, suit,
proceeding or governmental investigation pending or, to the Company’s knowledge,
threatened against (orally or in writing), involving, affecting or relating
to
the Company, the Acquired Assets or the transaction contemplated by this
Agreement.
2.22 Capitalization.
As of
the date hereof, ▇▇▇▇▇▇ holds all of the outstanding shares of the Company.
None
of the outstanding equity securities of the Company were issued in violation
applicable law in Israel.
2.23 No
Undisclosed Liabilities.
As far
as the Company is aware, it has no liabilities, except for: (i) liabilities
reflected or reserved against in the Balance Sheet or the Interim Balance
Sheet,
(ii) current liabilities incurred in the Ordinary Course of Business since
the
date of the Interim Balance Sheet, (iii) liabilities arising from the Contracts,
and (iv) liabilities imposed by applicable law.
2.24 Compliance
With The Foreign Corrupt Practices Act, Export Control and Antiboycott
Laws.
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(a) The
Company has at all times been in compliance with all Legal
Requirements
applicable to it, relating to export control and trade embargoes.
No
product sold or service provided by the Company during the
last five (5)
years has been, directly or indirectly, sold to or performed
on behalf of
Cuba, Iraq, Iran, Libya or North Korea.
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(b) The
Company has not violated the antiboycott prohibitions applicable
to it.
During the last five (5) years, the Company has not been a
party to, is
not a beneficiary under and has not performed any service or
sold any
product under any contract under which a product has been sold
to
customers in Cuba, Iraq, Iran, Libya or North Korea.
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2.25 Condition
and Sufficiency of Assets.
The
buildings and equipment used by the Company are in
workable operating condition and repair and
are
adequate to the uses to which they are being put, and none of such buildings
or
equipment is in need of extraordinary maintenance or repairs. The buildings
and
equipment used by the Company are sufficient for the continued conduct
of the
Business after the Closing in substantially the same manner as conducted
prior
to the Closing.
2.26 Books
and Records.
The
books of account, stock record books, and other records of the Company,
all of
which have been made available to Purchaser, are complete and correct and
have
been maintained in accordance with sound business practices. At the Closing,
all
of those books and records will be in the possession of the
Company.
2.27 Inventories.
All
items
included in the Inventories consist of a quality and quantity usable and,
with
respect to finished goods, saleable in the Ordinary Course of Business
of the
Company except for obsolete items and items of below-standard quality which
have
been written off or written down to net realizable value on the accounting
Records of the Company as of the Closing Date, as the case may be. The
Company
is not in possession of any finished goods, works in process, raw materials,
spare parts or other materials or supplies not owned by the Company, including
goods already sold. All of the Inventories have been valued at the lower
of cost
or net realizable value on a first in first out basis. Inventories now
on hand
that were purchased after the Balance Sheet Date were purchased in the
Ordinary
Course of Business of the Company at a cost not exceeding market prices
prevailing at the time of purchase. The quantities of each item of Inventories
(whether raw materials, work-in-process or finished goods) are not excessive
but
are reasonable in the present circumstances of the Company.
2.28 Accuracy
of Information Furnished. To
the
knowledge of the Seller, no
representation, statement or information contained in this Agreement (including
the various Schedules and Exhibits attached hereto) or any agreement executed
in
connection herewith or in any certificate or other document delivered pursuant
hereto or thereto or made or furnished to the Purchaser or their representatives
by the Seller, contains or shall contain any untrue statement of a material
fact
or omits or shall omit any material fact necessary to make the information
contained herein and therein not misleading. Copies of all documents listed
or
described in the various Schedules attached hereto and provided by Seller
to the
Purchaser are true, accurate and complete.
ARTICLE
III.
REPRESENTATIONS
AND WARRANTIES OF THE PURCHASER
The
Purchaser represents and warrants to the Seller that:
3.01 Organization
and Existence.
The
Purchaser is a corporation duly organized, validly existing and in good
standing
under the laws of the State of Israel.
3.02 Corporate
Authorization.
The
execution, delivery and performance by the Purchaser of this Agreement
and the
consummation by the Purchaser of the transaction contemplated hereby have
been
duly authorized by all necessary corporate action on the part of Purchaser.
This
Agreement constitutes a valid and binding agreement of the
Purchaser.
9
3.03 Governmental
Authorization.
The
execution, delivery and performance by the Purchaser of this Agreement
requires
no action by or in respect of, or filing with or consent of, any Governmental
Authority.
3.04 Non-Contravention.
The
execution, delivery and performance by the Purchaser of this Agreement
does not
and will not (i) contravene or conflict with the articles of association
of the
Purchaser or (ii) contravene or conflict with any provision of any law,
regulation, judgment, injunction, order or decree binding upon the Purchaser.
3.05 Fees.
There is
no investment banker, broker, finder or other intermediary which has been
retained by or is authorized to act on behalf of the Purchaser who might
be
entitled to any fee or commission from the Seller upon consummation of
the
transactions contemplated by this Agreement.
3.06 Litigation.
There is
no action, suit, investigation or proceeding pending against, or to the
knowledge of the Purchaser threatened against or affecting, the Purchaser
before
any court or arbitrator or any governmental body, agency or official which
in
any matter challenges or seeks to prevent, enjoin, alter or materially
delay the
transaction contemplated hereby.
3.07 Confirmation.
Purchaser confirms that it and its Officers and Directors were given the
opportunity to examine the financial and business situation of the Company,
and
to ask questions and receive answers from the management of the Company.
The
Purchaser and its Officers and Directors are knowledgeable, and are aware
of all
the risks associated with purchase of high-tech assets. The Purchaser further
confirms that this Agreement and the purchase of the Acquired Assets hereunder
are not based on a promise or guarantee by the Seller or anybody on his
behalf
as to the technical or commercial success of the Purchaser or as to the
future
value and/or marketability of the Acquired Assets, and there is no assurance
or
guarantee that forward-looking plans or projections, or planned products,
will
materialize or achieve the projected or expected results, nor is there
any
assurance or guarantee that past business results of the Company will be
matched
or exceeded by the Purchaser.
3.08 CSO
Rules. The Purchaser is aware that the purchase of the Acquired Assets
creates the following obligations regarding R&D support previously granted
by the CSO to the Company: (i) the Purchaser will be required to pay royalties
to the CSO on sale of products by the Purchaser, if the development of
such
products was supported by the CSO (whether prior to or after the Closing
Date),
and (ii) applicable law in Israel prohibits transfer of know-how and technology
created through the support of the CSO, and prohibits transfer of manufacture
rights for products based on such know-how and technology, except with
the prior
written approval of the CSO. Purchaser hereby confirms that upon transfer
of the
Acquired Assets to the Purchaser, it shall comply with and abide by the
rules
and regulations that presently apply to the Company.
ARTICLE
IV.
COVENANTS
OF SELLER AND PURCHASER
The
Seller and the Purchaser hereto agree that:
4.01 Best
Efforts; Further Assurances.
Subject
to the terms and conditions of this Agreement, the Seller and the Purchaser
will
use their best efforts to take, or cause to be taken, all actions and to
do, or
cause to be done, all things necessary or desirable under applicable laws
and
regulations to consummate the transactions contemplated by this Agreement
by
January 4, 2008. The Seller and the Purchaser each agree to execute and
deliver
such other documents, certificates, agreements, corporate and shareholder
approvals, and other writings and to take such other actions as may be
necessary
or desirable in order to consummate or implement expeditiously the transactions
contemplated by this Agreement by January 4, 2008, but without expanding
the
obligations and responsibilities of any party hereunder.
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4.02 Compliance
with Laws. Each party shall comply fully with all laws, rules, and
regulations applicable to it and the performance of its obligations under
this
Agreement, including laws and regulations dealing with payments, gifts,
and
gratuities.
4.03 Certain
Filings.
The
Seller and the Purchaser shall cooperate with one another (a) in determining
whether any action by or in respect of, or filing with, any Governmental
Authority is required, or any actions, consents, approvals or waivers are
required to be obtained from parties to any material contracts, in connection
with the consummation of the transactions contemplated by this Agreement,
and
(b) in taking such actions or making any such filings, furnishing information
required in connection therewith and seeking timely to obtain any such
actions,
consents, approvals or waivers.
4.04 Public
Announcements.
The
parties shall not issue any press release or otherwise announce this transaction
without mutual agreement to the terms of the press release, or make any
public
statement with respect to this Agreement or the transactions contemplated
hereby, except as may be required by applicable law or the regulations
of any
stock exchange or other trading market, in which case the disclosing party
shall
provide the other parties with reasonable notice and reasonable opportunity
to
comment upon such disclosure.
4.05 Notice
of Developments.
Each
party to this Agreement will give prompt written notice to the other of
any
material adverse development causing a breach of any of its representations
and
warranties under this Agreement.
ARTICLE
V.
CLOSING
5.01 Closing.
The
closing of the transactions contemplated by this Agreement (the “Closing”)
shall
take place at such location as may be agreed by the Purchaser and the Seller,
on
or before January 4, 2008, or such other date as the parties mutually agree.
The
date on which the Closing occurs is referred to in this Agreement as the
“Closing
Date.”
The
Closing may take place by delivery and exchange of documents by facsimile
or
electronic mail with originals to follow by overnight courier.
The
Closing notwithstanding, the provisions of the last paragraph of Section
1.02
above shall apply.
5.02 Deliveries
and Actions by the Seller.
At the
Closing, the Seller shall deliver, or cause to be delivered, to the
Purchaser:
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(a) the
confirmation of the CSO for transfer to the Purchaser, as described
in
Section 2.02(b) above;
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(b) the
waiver by PAR of the option described in Section 2.02(c) above,
or the
written declaration of the Company that such option has expired
due to
non-exercise until the expiration of the option period, and
is of no
force;
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(c) a
certificate of valid and subsisting status of the Company,
certified by
the Company’s legal counsel;
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(d) such
other separate instruments of sale, assignment or transfer
reasonably
required by the Purchaser;
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(e) a
certificate to the effect that each of the conditions specified
in this
Section 5.02 have been satisfied in all
respects.
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5.03 Deliveries
and Actions by the Purchaser.
At the
Closing, the Purchaser shall deliver to the Seller unless otherwise
specified:
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(a) the
full Purchase Price, as described in Section 1.02 above;
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(b) a
certificate of the Secretary or Assistant Secretary of the
Purchaser,
certifying as to (i) the valid and lawful existence of the
Purchaser, (ii)
the incumbency of all officers of the Purchaser executing this
Agreement
and any agreement executed in connection herewith and (iii)
the
resolutions of the board of directors of the Purchaser authorizing
the
execution, delivery and performance by such Purchaser of this
Agreement
and the transactions contemplated hereby;
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(c) a
certificate of valid and subsisting status of the Purchaser
certified by
the Purchaser’s legal counsel;
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(d) a
certificate to the effect that each of the conditions specified
in this
Section 5.03 have been satisfied in all respects.
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ARTICLE
VI.
INDEMNIFICATION
6.01 Indemnification
by the Seller.
The
Seller hereby agrees to indemnify, defend and hold harmless the Purchaser
and
each of its officers, directors, stockholders (RxElite), partners, members,
employees, agents and affiliates (collectively, “Purchaser
Indemnified Persons”)
from
and against any losses, liabilities, claims, obligations, damages (including
diminution in value), strict liability, Environmental Responsibility, fines,
penalties, assessments, deficiencies, actions, causes of action, arbitrations,
proceedings, remediations, judgments, settlements, violations or alleged
violations of law, costs and expenses (including reasonable attorneys’ fees and
all other expenses incurred in investigating, preparing, or defending any
litigation or proceeding, commenced or threatened) (collectively, “Purchaser
Damages”)
arising out of or resulting from:
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(a) any
breach of any representation or warranty the Seller has made
in this
Agreement;
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(b) any
breach by the Seller of any of his covenants or obligations
in this
Agreement; and
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(c) any
allegation by a third party of any of the
foregoing.
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The
Seller will not be liable for indemnification arising under this Section
for any
Purchaser Damages of or to any Purchaser Indemnified Person entitled to
indemnification from the Seller unless the aggregate amount of such Purchaser
Damages for which the Seller would be liable exceeds $50,000, in which
case the
Seller will be liable for all Purchaser Damages incurred by Purchaser
Indemnified Persons including such $50,000, up to the maximum liability
amount
as set forth below.
The
maximum indemnification liability of the Seller (whether arising in law
or
equity, in contract, tort or any other theory of law) towards any and all
Purchaser Indemnified Persons for any Purchaser Damages giving rise to
such
indemnification, shall not exceed an aggregate amount (for all Purchaser
Indemnified Persons and for all Purchaser Damages) of US$620,000 (six hundred
and twenty thousand US Dollars) and 2,000,000 (Two Million) Shares of RxElite,
Inc. Stock; and the Purchaser hereby waives, on its own behalf and on behalf
of
all Purchaser Indemnified Persons, any excess amounts of Purchaser Damages.
Furthermore, no claim for indemnification may be made after expiration
of the
survival period as per Section 7.01 below (18 months following the Closing
Date). The aforesaid limited liability constitutes the sole and exclusive
remedy
for the Purchaser Indemnified Persons for any breach by the Seller of any
and
all representations, warranties and covenants under and arising from this
Agreement. The aforesaid limitations shall not apply in the case of fraud
or
intentional misrepresentation by the Seller. As to the 2 million shares
of
RxElite stock mentioned above: if Seller becomes obligated under the aforesaid
indemnification undertaking, Seller will use for that purpose some of the
shares
that are to be issued to ▇▇. ▇. ▇▇▇▇▇▇ in the framework of the Assignment
and
Non-Competition Agreement of even date.
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6.02 Indemnification
by the Purchaser.
The
Purchaser hereby agrees to indemnify, defend and hold harmless the Seller
and
each of its officers, directors, stockholders (▇▇▇▇▇▇), partners, members,
employees, agents and affiliates (collectively, “Seller
Indemnified Persons”)
from
and against any losses, liabilities, claims, obligations, damages (including
diminution in value), strict liability, fines, penalties, assessments,
deficiencies, actions, causes of action, arbitrations, proceedings,
remediations, judgments, settlements, violations or alleged violations
of law,
costs and expenses (including reasonable attorneys’ fees and all other expenses
incurred in investigating, preparing, or defending any litigation or proceeding,
commenced or threatened) (collectively, “Seller
Damages”)
arising out of or resulting from:
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(a) any
breach of any representation or warranty the Purchaser has
made in this
Agreement;
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(b) any
breach by Purchaser of its covenants or obligations in this
Agreement; and
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(c) any
allegation by a third party of any of the foregoing.
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The
maximum indemnification liability of the Purchaser (whether arising in
law or
equity, in contract, tort or any other theory of law) towards any and all
Seller
Indemnified Persons for any Seller Damages giving rise to such indemnification,
shall not exceed an aggregate amount (for all Seller Indemnified Persons
and for
all Seller Damages) of US$620,000 (six hundred and twenty thousand US Dollars);
and the Seller hereby waives, on its own behalf and on behalf of all Seller
Indemnified Persons, any excess amounts of Seller Damages. Furthermore,
no claim
for indemnification may be made after expiration of the survival period
as per
Section 7.01 below (18 months following the Closing Date). The aforesaid
limited
liability constitutes the sole and exclusive remedy for the Seller Indemnified
Persons for any breach by the Purchaser of any and all representations,
warranties and covenants under and arising from this Agreement. The aforesaid
limitations shall not apply in the case of fraud or intentional
misrepresentation by the Purchaser, and shall not apply to breach of the
obligation to pay the full amount of the Purchase Price.
6.03 Indemnification
Procedure for Third-Party Claims.
Promptly
after receipt by a party entitled to indemnification hereunder (the
“Indemnified
Party”)
of
written notice of the institution of any legal proceeding, or of any claim
or
demand, asserted by a third party (a “Third
Party Claim”)
against the Indemnified Party with respect to which a claim for indemnification
is to be made pursuant to Section 6.01 or 6.02 herein, the Indemnified
Party
shall give written notice to the other party (the “Indemnifying
Party”)
of
such Third Party Claim. The Indemnifying Party shall be entitled to participate
in and to assume the defense of such Third Party Claim with counsel reasonably
satisfactory to the Indemnified Party, and after notice from the Indemnifying
Party to such Indemnified Party of such assumption of defense, and provided
that
the Indemnifying Party continues to diligently pursue such defense, the
Indemnifying Party shall not be liable to such Indemnified Party for any
legal
or other expenses subsequently incurred by the latter in connection with
the
defense thereof. Notwithstanding the foregoing, an Indemnified Party shall
in
all cases be entitled to control its defense, including the selection of
separate counsel (at the cost and expense of the Indemnifying Party), of
any
Third Party Claim if such claim: (i) may result in injunctions or other
equitable remedies in respect of the Indemnified Party which would affect
its
business or operations in any materially adverse manner; (ii) may result
in
material liabilities which may not be fully indemnified hereunder; (iii)
may
have a significant adverse impact on the business or the financial condition
of
the Indemnified Party (including a Material Adverse Effect on the tax
liabilities, earnings or ongoing business relationships of the Indemnified
Party) even if the Indemnifying Party pays all indemnification amounts
in full
or (iv) the anticipated defendants in any such situation, proceeding or
action
include both the Indemnified Party and the Indemnifying Party, and the
Indemnified Party shall have reasonably concluded that there may be legal
defenses available to it which are different from, additional to or inconsistent
with those available to the Indemnifying Party. No Indemnifying Party will
enter
into any settlement with respect to such Third Party Claim without the
prior
written consent of the Indemnified Party unless such settlement (a) requires
solely the payment of money damages by the Indemnifying Party and (b) includes
as an unconditional term thereof the release by the claimant or the plaintiff
of
the Indemnified Party and the persons for whom the Indemnified Party is
acting
or who are acting on behalf of the Indemnified Party from all liability
in
respect of the proceeding giving rise to the Third Party Claim.
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6.04 Limitations
on Indemnification. Without
prejudice to the limitation provisions of Sections 6.01 and 6.02 above,
and
except in the case of actual fraud by a party hereto, no party shall be
liable
under this Agreement for special, punitive, exemplary, consequential, or
indirect damages, or lost profits, whether based on contract, tort, strict
liability, other Laws or otherwise, and whether or not arising from the
other
party’s sole, joint or concurrent negligence, strict liability or other
fault.
ARTICLE
VII.
MISCELLANEOUS
7.01 Survival.
The
representations and warranties of the Purchaser and the Seller contained
in this
Agreement shall survive the Closing for a period of eighteen (18) months
after
the Closing Date.
7.02 Notices. All
notices, requests and other communications to either party hereunder shall
be in
writing (including facsimile, telecopy, e-mail or similar writing) and
shall be
deemed given when delivered:
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If
to Purchaser, to:
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▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇
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CEO
and President
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RxElite
Inc.
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▇▇▇▇
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
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▇▇▇▇▇
▇▇▇
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▇▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇
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Telecopier:
(▇▇▇) ▇▇▇-▇▇▇▇
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Telephone:
(▇▇▇) ▇▇▇-▇▇▇▇
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with
a copy (which shall not constitute notice) to:
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▇▇▇▇▇▇
and ▇▇▇▇▇, L.L.P.
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▇▇▇
▇▇▇▇ ▇▇▇▇
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▇▇▇▇, ▇▇▇ ▇▇▇▇
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Attention:
▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
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Telecopier:
(▇▇▇) ▇▇▇-▇▇▇▇
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Telephone:
(▇▇▇) ▇▇▇-▇▇▇▇
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If
to Seller, to:
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▇▇.
▇▇▇▇ ▇▇▇▇▇▇
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▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
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▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇
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Telecopier:
▇▇▇▇-▇-▇▇▇▇▇▇▇
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Telephone:
▇▇▇▇-▇▇-▇▇▇▇▇▇▇
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with
a copy (which shall not constitute notice) to:
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Primes,
Shiloh, ▇▇▇▇▇ ▇▇▇▇ - Law Firm
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▇▇,
▇▇▇▇▇▇ ▇▇▇▇▇ (▇▇▇ ▇▇▇▇)
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▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇
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Attention:
▇▇▇▇▇ ▇▇▇▇▇▇, Adv.
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Telecopier:
▇▇▇▇-▇-▇▇▇▇▇▇▇
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Telephone:
▇▇▇▇-▇-▇▇▇▇▇▇▇
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14
Each
of
the above persons may change their address or facsimile number or telephone
number by notice to the other persons in the manner set forth
above.
7.03 Amendments;
No Waivers.
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(a) Any
provision of this Agreement may be amended or waived if, and
only if, such
amendment or waiver is in writing and signed, in the case of
an amendment,
by the Purchaser and the Seller, or in the case of a waiver,
by the party
against whom the waiver is to be effective.
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(b) No
failure or delay by any party in exercising any right, power
or privilege
hereunder shall operate as a waiver thereof nor shall any single
or
partial exercise thereof preclude any other or further exercise
thereof or
the existence of any other right, power or privilege. The rights
and
remedies herein provided shall be cumulative and not exclusive
of any
rights or remedies provided by
law.
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7.04 Expenses.
Except
as otherwise provided herein, all costs and expenses incurred in connection
with
this Agreement shall be paid by the Purchaser or the Seller, depending
on which
such party incurred or directed the incurrence of such cost or expense.
7.05 Successors
and Assigns.
The
provisions of this Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and permitted
assigns. No party to this Agreement may assign, delegate or otherwise transfer
any of its rights or obligations under this Agreement without the consent
of the
other party hereto provided further that Purchaser may assign its rights
and
obligations under this Agreement to any of its subsidiaries or Affiliates,
but
no such assignment shall relieve Purchaser of its obligations hereunder
which
shall thereafter be joint and several as between Purchaser and its assignee.
Neither this Agreement nor any provision hereof is intended to confer upon
any
person other than the parties hereto any rights or remedies hereunder.
7.06 Governing
Law.
This
Agreement shall be governed by, and construed and enforced in accordance
with,
the laws of the State of Israel without regard to any provision thereof
that
would require the application of the law of any other jurisdiction.
Each
party hereby submits to the exclusive jurisdiction of the courts of the
State of
Isarel.
7.07 Specific
Performance.
Each of
the parties acknowledges and agrees that the other party would be damaged
irreparably in the event any of the provisions of this Agreement are not
performed in accordance with their specific terms or otherwise are breached.
Accordingly, each of the parties agrees that the other party shall be entitled
to an injunction or injunctions to prevent breaches of the provisions of
this
Agreement and to enforce specifically this Agreement and the terms and
provisions hereof, in addition to any other remedy to which it may be entitled,
at law or in equity.
7.08 Counterparts;
Effectiveness.
This
Agreement may be signed in any number of counterparts, each of which shall
be an
original, with the same effect as if the signatures thereto and hereto
were upon
the same instrument. Facsimile copies of signature pages shall have the
same
legal effect as signed originals. This Agreement shall become effective
when
each party hereto shall have received a counterpart hereof signed by the
other
party hereto.
7.09 Entire
Agreement.
This
Agreement, the Schedules and Exhibits hereto, and any other documents referred
to herein constitute the entire agreement between the parties with respect
to
the subject matter hereof and supersede all prior agreements, understandings
and
negotiations, both written and oral, between the parties with respect thereto.
No representation, inducement, promise, understanding, condition or warranty
not
set forth herein has been made or relied upon by either party
hereto.
15
7.10 Construction.
The
parties have participated jointly in the negotiation and drafting of this
Agreement. In the event an ambiguity or question of intent or interpretation
arises, this Agreement shall be construed as if drafted jointly by the
parties
and no presumption or burden of proof shall arise favoring or disfavoring
any
party by virtue of the authorship of any of the provisions of this Agreement.
The following rules of construction shall apply to this Agreement:
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(a) Any
reference to any federal, state, provincial or local statute
or law shall
be deemed also to refer to all rules and regulations promulgated
thereunder, unless the context requires otherwise.
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(b) All
uses of “include,” “including” or words or phrases of similar import shall
be deemed to be followed by “without limitation.”
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(c) The
headings and titles herein are for convenience only and shall
have no
significance in the interpretation hereof.
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(d) Unless
otherwise provided, all references in this Agreement to “Articles” and
“Sections” are to articles and sections of this Agreement; and all
references to “Exhibits”, “Schedules” or “Annexes” are to exhibits,
schedules or annexes attached to this Agreement, each of which
is made a
part of this Agreement for all purposes.
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(e) Unless
the context otherwise requires, the words “this Agreement,” “hereof,”
“hereunder,” “herein,” “hereby” or words or phrases of similar import
shall refer to this Agreement as a whole and not to a particular
Article,
Section, subsection, clause or other subdivision hereof.
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(f) Capitalized
terms which are defined herein shall have the specified meaning
regardless
of whether any usage appears before or after the place where
a term is
defined.
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(g) Terms
defined in the singular shall have the corresponding meaning
when used in
the plural and vice versa. Any definition of one part of speech
of a word,
such as definition of the noun form of that word, shall have
a comparable
or corresponding meaning when used as a different part of speech,
such as
the verb form of that word.
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(h) Unless
the context otherwise requires, references to agreements shall
be deemed
to mean and include such agreements as the same may be amended,
supplemented and otherwise modified from time to time, and
references to
parties to agreements shall be deemed to include the permitted
successors
and assigns of such parties.
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(i) Where
the character or amount of any asset or liability or item of
income or
expense is required to be determined or any consolidation or
other
accounting computation is required to be made for the purposes
of this
Agreement, the same shall be done in accordance with generally
accepted
accounting principles in the United States and Israel, except
where such
principles are inconsistent with the specific provisions of
this Agreement
or any applicable law.
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7.11 Severability.
Any part
of this Agreement which is found to be void, invalid, illegal or unenforceable,
shall be severed from this Agreement and ineffective to the extent of that
voidness, invalidity, illegality or unenforceability. Such voidness, invalidity,
illegality or unenforceability will not invalidate, affect or impair the
remaining provisions of this Agreement. If a court of competent jurisdiction
determines that the terms in respect of which covenants in this Agreement
are to
be entered are unreasonable or unenforceable for any reason, then this
Agreement
shall be reread and construed with such terms, as may be applicable, as
determined to be reasonable by a court of competent jurisdiction and the
Agreement shall be amended and construed accordingly hereby.
16
7.12 Certain
Definitions.
“Accounts
Payable”
shall
mean (a) all trade accounts payable and other rights of customers of the
Company
to receive payment and the full benefit of all security for such accounts
or
rights to payment, including all trade accounts payable representing amounts
payable in respect of goods shipped or products sold or services rendered
by the
customers of the Company, (b) all other accounts or notes payable of Company
and
the full benefit of all security for such accounts or notes and (c) any
claim,
remedy or other right related to any of the foregoing.
“Accounts
Receivable”
shall
mean (a) all trade accounts receivable and other rights to payment from
customers of the Company and the full benefit of all security for such
accounts
or rights to payment, including all trade accounts receivable representing
amounts receivable in respect of goods shipped or products sold or services
rendered to customers of the Company, (b) all other accounts or notes receivable
of the Company and the full benefit of all security for such accounts or
notes
and (c) any claim, remedy or other right related to any of the
foregoing.
“Acquired
Assets”
shall
have the meaning assigned to such term in Section 1.01.
“Affected
Employees”
shall
have the meaning assigned to such term in Section 2.14(a).
“Affiliate”
shall
mean, with respect to a Person, another Person that, directly or indirectly,
through one or more intermediaries, controls or is controlled by, or is
under
common control with, such first Person. For this definition, “control”
(and
its derivatives) means the possession, directly or indirectly, or as trustee
or
executor, of the power to direct or cause the direction of the management
and
policies of a Person, whether through ownership of voting equity interests,
as
trustee or executor, by Contract or credit arrangements or
otherwise.
“Agreement”
shall
have the meaning assigned to such term in the preamble.
“Assignment,
Assumption and No-Compete Agreement”
shall
have the meaning assigned to such term in the preamble.
“Business”
shall
have that meaning assigned to such term in the preamble.
“Business
Day”
means
a
day other than Saturday, Sunday or any day on which banks located in the
City of
New York, New York, are authorized or obligated to close.
“Business
Facility”
includes any building, enclosure, improvement, vacant land, lot, wharf,
dock or
other facility or property of any kind (whether real or personal) which
the
Company leases, operates, owns, or manages in any manner as of the Closing
Date
or which the Company leased, operated, owned or managed in any manner on
or
prior to the Closing Date.
“Closing”
shall
have the meaning assigned to such term in Section 5.01.
“Closing
Date”
shall
have the meaning assigned to such term in Section 5.01.
“Company”
shall
have the meaning assigned to such term in the preamble.
“Competing
Business”
shall
have the meaning assigned to such term in Section 2.17(b).
“Contracts”
shall
have the meaning assigned to such term in Section 2.12.
“Encumbrances”
means
any mortgages, pledges, liens, encumbrances, charges or other security
interests.
“GAAP”
shall
have the meaning assigned to such term in Section 2.05.
17
“Governmental
Authority”
means
any nation, province, state, county, municipality or any other political
subdivision of any of the foregoing, including (A) any court, governmental
department, tribunal, arbitrator or panel of arbitrators, authority, agency,
body, board, bureau, commission, official or other instrumentality of the
United
States of America or any nation, state, province, county, city or other
political subdivision or similar governing entity, (B) any person or entity
exercising executive, legislative, regulatory, judicial or administrative
functions and (C) any governmental, quasi-governmental or non-governmental
body
(whether executive, legislative, judicial or administrative) administering,
regulating or having general oversight over the Business.
“Improvements”
shall
mean any development of the Real Property.
“Indebtedness”
when
used
with respect to the Company shall mean, without duplication: (a) indebtedness
created, issued or incurred by the Company or its Subsidiaries for borrowed
money (whether by loan or the issuance and sale of debt securities); (b)
obligations of the Company or its Subsidiaries to pay the deferred purchase
or
acquisition price of property or services, other than Accounts Payable
arising,
and accrued expenses incurred, in the ordinary course of business; (c)
obligations of the Company or its Subsidiaries in respect of letters of
credit,
surety bonds or similar instruments; and (d) any guarantee or other credit
support obligation issued or provided by the Company or its Subsidiaries,
including any obligation of the Company or its Subsidiaries to directly
or
indirectly support the credit of another entity which is secured by a Lien
on
any assets of the Company or its Subsidiaries, even if the respective
indebtedness so secured has not been assumed by the Company or its
Subsidiaries.
“Indemnified
Party”
shall
have the meaning assigned to such term in Section 7.04.
“Indemnifying
Party”
shall
have the meaning assigned to such term in Section 7.04.
“Intellectual
Property Assets”
means
all software, inventions, art works, patents, patent applications, processes,
shop rights, formulas, brand names, trade secrets, know-how, service marks,
trade names, trademarks, trademark applications, copyrights, source and
object
codes, customer lists, drawings, ideas, algorithms, processes, computer
software
programs or applications (in code and object code form), tangible or intangible
proprietary information and any other intellectual property and similar
items
and related rights owned by or licensed to the Seller or used in the Business,
together with any goodwill associated therewith and all rights of action
on
account of past, present and future unauthorized use or infringement
thereof.
“Interim
Balance Sheet”
shall
have the meaning assigned to such term in Section 2.05.
“Inventories”
shall
mean all inventories of the Company, wherever located, including all finished
goods, works in process, raw materials, spare parts and all other materials
and
supplies to be used or consumed by the Company in the production of finished
goods.
“Lease”
shall
mean any lease or rental agreement pertaining to the occupancy by the Company
or
the use by the Business of any space on any Real Property.
“Leased
Premises”
shall
mean any Real Property subject to a Lease.
“Legal
Requirement”
shall
mean any national, federal, state, local, municipal, foreign, international,
multinational or other constitution, law, ordinance, principle of common
law,
code, regulation, statute or treaty or decision or order of any applicable
Governmental Authority.
“Liabilities”
shall
mean with respect to any Person, any liability or obligation of such Person
that
is required to be accrued on the financial statements of such
Person.
“Losses”
means
all damage, loss, liability and expense, including, without limitation,
penalties, interest, reasonable expenses of investigation and reasonable
attorneys’ fees and expenses in connection with any action, suit or proceeding
incurred or suffered by any of the Indemnified Parties arising out of any
breach
of any representation or warranty, covenant or agreement made or to be
performed
by Seller pursuant to this Agreement.
“Material
Adverse Effect”
with
respect to any Person shall mean any change or effect (or any development
that,
insofar as can reasonably be foreseen, could reasonably be expected to
result in
any change or effect) that could reasonably be expected to be materially
adverse
to the business, properties, assets, condition (financial or otherwise),
results
of operations or prospects of that person and its subsidiaries, taken as
a whole
and without limiting the foregoing, such term shall in any case mean an
effect
or change that adversely affects or impairs the value, ownership or operation
of
any asset by, or creates a liability for, an amount greater than
$100,000.
“Ordinary
Course of Business”
means
an action taken by a Person will be deemed to have been taken in the Ordinary
Course of Business only if that action:
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(a) is
consistent in nature, scope and magnitude with the past practices
of such
Person and is taken in the ordinary course of the normal,
day-to-day
operations of such Person;
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(b) does
not require authorization by the board of directors or shareholders
of
such Person (or by any Person or group of Persons exercising
similar
authority) and does not require any other separate or special
authorization of any nature; and
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(c) is
similar in nature, scope and magnitude to actions customarily
taken,
without any separate or special authorization, in the ordinary
course of
the normal, day-to-day operations of other Persons that are
in the same
line of business as such
Person.
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“Permits”
shall
have the meaning assigned to such term in Section 2.13.
“Permitted
Encumbrances”
shall
mean:
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(a) liens
for taxes, assessments and governmental charges due and being
contested in
good faith and diligently by appropriate proceedings (and for
which a
deposit has been set aside that is being transferred to Purchaser
at
Closing).
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(b) servitudes,
easements, restrictions, rights-of-way and other similar rights
in real
property or any interest therein which are covered by title
insurance;
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(c) liens
for taxes either not due and payable or due but for which notice
of
assessment has not been given; and
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(d) undetermined
or inchoate liens, charges and privileges incidental to current
construction or current operations and statutory liens, charges,
adverse
claims, security interests or encumbrances of any nature whatsoever
claimed or held by any Governmental Authority that have not
at the time
been filed or registered against the title to the asset or
served upon the
Seller pursuant to law or that relate to obligations not due
or
delinquent.
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“Person”
means
an individual or a corporation, company, limited liability company, sole
proprietorship, joint venture, partnership, trust, estate, unincorporated
organization, association, or other entity.
“Purchaser”
shall
have the meaning assigned to such term in the preamble.
“Purchaser
Damages”
shall
have the meaning assigned to such term in Section 6.01.
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“Purchaser
Indemnified Persons”
shall
have the meaning assigned to such term in Section 6.01.
“Purchase
Price”
shall
have the meaning assigned to such term in Section 1.02.
“Real
Property”
shall
mean all real property controlled by the Company.
“Records”
shall
mean information that is inscribed on a tangible medium or that is stored
in an
electronic or other medium and is retrievable in perceivable form.
“Related
Documents”
shall
have the meaning assigned to such term in Section 2.02(a).
“Seller”
shall
have the meaning assigned to such term in the preamble.
“Seller
Damages”
shall
have the meaning assigned to such term in Section 6.02.
“Seller
Indemnified Persons”
shall
have the meaning assigned to such term in Section 6.02.
“Subsidiary”
shall
mean any Person which is owned or controlled by the Company.
“Tangible
Personal Property”
shall
mean all machinery, equipment, tools, furniture, office equipment, computer
hardware, supplies, materials, vehicles and other items of tangible personal
property (other than Inventories) of every kind owned or leased by Company
(wherever located and whether or not carried on Company’s books), together with
any express or implied warranty by the manufacturers or sellers or lessors
of
any item or component part thereof and all maintenance records and other
documents relating thereto.
“Tax”
or
“Taxes”
means
any
national, federal, state, provincial, local or foreign income, gross receipts,
license, payroll, employment, excise, severance, stamp, occupation, premium,
windfall profits, customs duties, capital stock, franchise, profits,
withholding, social security (or similar), unemployment, disability, real
property, personal property, sales, use, transfer, registration, value
added,
alternative minimum or other tax of any kind whatsoever, including without
limitation, any interest, penalty or addition thereto, whether disputed
or
not.
“Tax
Return”
means
any
return, declaration, report, claim for refund or information return or
statement
relating to Taxes, including without limitation, any schedule or attachment
thereto, and including, without limitation, any amendment thereof.
“Third
Party Claim”
shall
the meaning assigned to such term in Section 7.04.
“Third
Party Intellectual Property Assets”
shall
have the meaning assigned to such term in Section 2.09.
“Year
End Financial Statements”
means
the December 31, 2006 Financial Statements of the Company.
[signature
page follows]
19
IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized officers effective as of the day
and
year first above written but executed on the dates set forth below.
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PURCHASER:
RXELITE ISRAEL LTD.
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By:
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇▇
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Its
Authorized Officers
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SELLER:
FINETECH LABORATORIES LTD.
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By:
▇▇. ▇▇▇▇ ▇▇▇▇▇▇, CEO
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